 New focus
in East African trade |
TANZANIA is a member of numerous regional economic blocs; the most important ones being East African Community (EAC), Southern African Development Community (SADC), Common Market for Eastern and Southern Africa ( COMESA ), and African, Caribbean and Pacific (ACP) States.
 The East african Community |
The EAC, whose member states are Tanzania, Kenya and Uganda has a combined population of over 80 million people. It was established in 1967 aiming at harmonising the economic, communication and transportation system of the three old British colonies. However, the EAC broke up in 1977 due to the political differences among its state leaders. Efforts to revive the EAC started in 1993 when Presidents Ali Hassan Mwinyi of Tanzania, Yoweri Kaguta Museveni of Uganda and Daniel Arap Moi of Kenya established a Tripertite Commission in northern Tanzanian town of Arusha. After years of consultations involving governments, civil society organisations and the private sector, the EAC Treaty was signed in Arusha Tanzania in November 1999 by heads of state of the three countries. The Treaty became a legal entity in July this year after Tanzania parliament ratified it following similar moves by Kenyan and Ugandan parliaments. The new EAC was revived on the premises of the old customs and economic union with major objectives being the integration of the economies of the three member states and creating a political superstructure that would probably gradually lead to a federation and unite the people of the sub-region.
The location of Kenya and Tanzania, who share an over 1,000kms coastline along the eastern coastline with ports such as Mombasa and Dar es Salaam serving many landlocked countries of southern and central Africa such as Malawi, Zambia, Rwanda, Burundi and Democratic Republic of Congo, makes the area one of the most lucrative in terms of investment. The donor community and multi-lateral creditor institutions such as World Bank and European Union have commended the three countries for reviving the community. The EU through its European Investment Bank has pledged to finance a modern digital transmission project jointly with East African Development Bank (EADB) for the whole of the sub-region.
| A regional activity |
Tanzania's foreign policy as well as economic activities have throughout country's history been exercised by regional activity to the great extent. So was the case also when Tanzania became one of the founding members to Southern Africa Development Co-ordination Conference (SADCC), another important trading and economic bloc, that was formed in April 1980 and became later on known as Southern Africa Development Community (SADC). Originally, SADCC's major objective was to isolate South African minority administration economically from other southern African countries. It changed its name and priorities in August 1992 after major changes towards democratic rule started in South Africa by the release of Nelson Mandela. With a current membership of 14 countries, SADC has a combined population of over 200 million people including Africa's strongest economy, South Africa. Other SADC members are Angola, Botswana, Democratic Republic of Congo, Lesotho, Namibia, Malawi, Mauritius, Mozambique, Swaziland, Seychelles, Tanzania, Zambia and Zimbabwe, altogether creating a diversified and interesting economic potential.
In Tanzania, the SADC sponsored projects include Mtwara Corridor in southern regions, a transport network aiming at connecting Mozambique, Malawi and Zambia by road and railway, and the Tanzania Zambia Railways Authority (TAZARA) upgrading project. Major donors supporting SADC's infrastructure development projects include the United States, which since 1992 has provided over 250m dollars in loans and grants, African Development Bank (ADB) and other multi-lateral financial institutions.
| Pulling out of Comesa |
| Common Market for Eastern and Southern Africa (COMESA) formed in 1981 was originally known as Preferential Trade Area (PTA) before changing its name in 1994. COMESA's main objective is to integrate member states economies, to encourage intra-regional trading by removing all tariff and non-tariff barriers by October this year and to create a single investment area to attract FDI. With a membership of 21 countries namely Angola, Burundi, Comoros, Democratic Republic of Congo (DRC), Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zaire, Zambia and Zimbabwe, COMESA has a combined estimated population of over 400m people.
Tanzania however, just like Mozambique and Lesotho which pulled out from the group two years ago, has issued an interim notice to pull out from the economic bloc by September this year in favour of SADC and EAC. Both the country's private sector and the government argue that it is necessary to pull out from COMESA temporarily in order to build local industrial capacity before exposing it to COMESA's free trade area starting in October this year. Tanzania parliament during its budget sessions in June/July 2000 ratified this decision. The Honourable Mr.Iddi Simba, Minister of Commerce and Industry has strongly defended the decision to withdraw from the 20 member bloc as being innevitable. "By strengthening our position in the EAC and in SADC, we have all the countries which we need to form a solid and powerful trading bloc with, 18 countries with a population of 300 million people. By pulling out of COMESA, we are only losing Egypt, with which we don't have trade links, and same applies to losing Eritrea, Djibouti, Ethiopia and Somalia, again with which we don't have trade links at all. The cost of keeping our membership of COMESA is enormous, it does not pay itself back."
Although Zanzibar is part of Tanzania, it has disagreed with the mainland about union's specific areas of cooperation such as defence, foreign affairs, banking. The Zanzibar government has already disputed the decision of the Tanzania government to pull out from COMESA, and has demanded separate representation as a separate state in EAC. If Zanzibar remains in COMESA, it becomes problematic for Tanzania trying to escape competition from strong economies such as Mauritius, Egypt and Kenya. Those would just use the isles for their merchandise, which would eventually anyway find their way to the mainland Tanzania through smugglers. Fundamentally, the situation with COMESA simply refers to the factor, that Tanzania needs time to develop its own economy first within its own boundaries in order to become compatible and self-sufficient, and only after that begin to compete in regional and international markets.
Tanzania is also a member of African, Caribbean and Pacific (ACP) states, which signed the Cotonou (Benin) Partnership Agreement last June replacing the expired Lome IV Convention.
Apart from preferential trading relations with the EU through the agreement, Tanzania also benefits from grants and loans for infrastructure development, balance of payment support, as well as foreign and domestic debt repayment. Additionally, EU has decided to donate more than 1m euro over net 5 years in order to better finance the coordination of ACP countries within WTO, particularly in connection to the next round of multilateral trade negotiations. The new agreement follows the footsteps of Lome in its reflection of historical relations and in an attempt to integrate the ACP countries into the world economy. |
